In California, an IRA is not countable for the Community Spouse, and the IRA is not countable for an institutional spouse, as long as the IRA owner is receiving periodic payments, at least once per year. The California rules for retirement accounts are not set in state law or regulations. The IRA rules are found in "draft regulations" (draft reg. #50458) that were never adopted. The draft regulations were issued as an attachment to an All County Welfare Directors letter issued by the Department of Health Services on January 5, 1990. California’s statewide "informal" rules have been followed in all counties for the past 18 years.
The only "rule" pertaining to retirement accounts that has been issued since 1990 was contained in another All County Welfare Directors letter, issued on October 18, 2002 (ACWDL #02-51). This ACWDL provided "information" to the counties to assist them in understanding how to treat retirement accounts. Question #4 in this ACWDL explains that the IRA is unavailable if the elder is taking his or her Required Minimum Distributions. The letter clarifies that the "periodic payments" can be either "periodic payments" from EACH fund, or "systematic withdrawals" from EACH fund, or the minimum required distributions under the IRC after age 70 1/2 for ANY of the funds.
The letter also says that the retirement account is unavailable if the person would have to terminate employment to get a distribution (in other words, the person would still working at a job when they or their spouse needed a nursing home).
Current as of January 1, 2009.